18. What other type of debts are not dischargeable in bankruptcy if the creditor successfully objects?
Four types of debts may survive a chapter 7 case if, and only if,
- the creditor files a formal objection-called a Complaint to Determine Dischargeability—during the bankruptcy proceedings, and
- the creditor proves that the debt fits into one of the categories discussed below.
Creditors might not bother to object. Even though bankruptcy rules provide the creditors the right to object to the discharge of certain debts, many creditors-and their attorneys don’t fully understand this right. Moreover, many creditors might sensibly decide to write off the debt rather than contesting it. It can be expensive to file a “dischargeability action†The filing fee to file an adversary case is $250. Moreover, your creditor will also have to pay lawyer fees. If the debt is not significant, then many creditors will not believe that it is worth the effort to contest the dischargeability of their debt.
a. Debts Arising From Fraud. In order for a creditor to prove that one of your debts should survive bankruptcy because you incurred it through fraud, the debt must fit one of the categories below.
b. Debts from intentionally fraudulent behavior. If a creditor can propve that a debt arose because of your dishonest act, and that the debt wouldn’t have arisen had you been honest, then the court probably will not permit you discharge the debt. Here are some common examples:
- You wrote a check for something and stopped payment on it, even though you will kept the item.
- You wrote a check against insufficient funds but assured the merchant that the check was good.
- You rented or borrowed an expensive item and claimed it was yours, in order to use it as collateral to get a loan.
- You got a loan by informing the lender you’d pay it back, when you had no intention of doing so.